Why we need strong Net neutrality rules now

NatWorden

Bloomberg

Kevin Spacey and Robin Wright play ruthless politicos in Netflix's popular original series ‘House of Cards.’

A new dust-up between Netflix Inc. and Comcast Corp. over so-called “Net neutrality” brings an important but confusing debate over the future of the Internet into America’s living rooms at a time of opportunity for achieving sensible regulations on Internet service providers (ISPs).

Last week, Netflix CEO Reed Hastings published a blog post arguing for strong Net neutrality rules that would bar Comcast and other ISPs from charging such fees in order to “ensure the Internet remains humanity’s most important platform for progress.”

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This high-profile call for regulation comes from a fledgling company that has harnessed the power of the Internet to mount the leading threat to the legacy giants of the pay-TV business — the lifeblood of the corporate media industry. After just a few years in existence, Netflix’s online video streaming service has amassed roughly 40 million subscribers — more than HBO — and its initial forays into making original films and shows, like “The Square” and “House of Cards,” are winning critical acclaim alongside the leading brands in showbiz.

Meanwhile, the number of Americans who pay for TV through cable, satellite or fiber services fell by more than a quarter of a million in 2013, the first full-year decline, according to research firm SNL Kagan. This is the latest evidence that consumers are increasingly tempted to stop paying the old cable TV bill in favor of online video alternatives, like Netflix, Amazon, Google’s YouTube and others.

In addition to its discussions with Apple about launching a streaming service, Comcast is also responding to the threat by acquiring even more scale. After purchasing a major media and entertainment conglomerate in NBC Universal, it’s now moving to acquire Time Warner Cable
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, the nation’s second-largest cable provider, in a $45 billion deal that would create a media and telecommunications conglomerate of unprecedented scale and market power.

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The resulting approval process in Washington D.C. will unfold as regulators and lawmakers take a fresh look at Net neutrality rules. Those rules, long imposed by the Federal Communications Commission, were recently eviscerated after Verizon
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successfully challenged them in federal court, making it legal for an ISP to discriminate against content on their networks at will.

So, the time is right for simple and sensible Net neutrality regulations with real teeth to be adopted to prevent the handful of large ISPs that dominate the industry from discriminating against Internet content that runs counter to their interests. As the Internet solidifies its inevitable position as the dominant media and communications platform in the world, a company like Comcast, which is the only choice for high-speed Internet service for many Americans, will find itself in a position to slow content on its network that competes with its own content or that it doesn’t like for whatever reason.

In this particular case, video streaming content from Netflix that was requested by Comcast’s broadband subscribers was slowed until Netflix agreed to pay Comcast a fee. Comcast responded to Hastings’s argument by saying the agreement was related to “peering and Internet interconnection,” and that providers like Netflix have always paid for such services. That claim is difficult to evaluate because such dealings usually are not revealed publicly, but it’s not clear to me that content providers, like Netflix, generally pay such fees.

Regardless, the troubling fact remains: Comcast recently found itself in a position to slow the delivery of competitive media content to its Internet subscribers, who will probably soon comprise nearly 40% of American homes. As a result, it was able to charge Netflix a fee that Netflix had not paid previously and apparently does not pay to other ISPs, like Cablevision
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, whose subscribers enjoy quality access to the video streaming service.

With so few Internet service choices available to consumers, every company and individual that attempts to communicate with others on the web needs assurance that their content is not restrained by Comcast or any other ISP for any discriminatory purpose. Otherwise, we risk losing the qualities that have made the Internet such a powerful communications tool with so much promise to continue improving our lives.

Before the Internet, access to media platforms that could reach a mass audience was basically limited to the corporate media. On the Internet, everyone has access to such platforms.

This change is what has made the Internet such a disruptive, innovative and democratizing force in media and the larger business and general landscape. It also accounts for the many blessings the Internet has bestowed on consumers — cheaper goods and services, convenience, choice, efficiency, entertainment, information, freedom and transparency to name just a few.

Without effective Net neutrality regulation, ISP’s have the ability to begin restoring limits on mass media platforms on the Internet by discriminating against content they don’t like, giving preferential treatment to content they do like, or charging restrictive fees for quality connections. They have a clear incentive to do so, and public promises to do otherwise are not sufficient — real regulation is needed.

Netflix is also acting in its economic interests to support Net neutrality rules. It doesn’t want to pay Comcast a new fee, but Hastings is right to praise the Internet as a platform for progress. Without it, there would not be a Netflix.

Nat Wordenis a journalist whose work has appeared in The Wall Street Journal, The New York Times, Outside Magazine, Newsday, The Village Voice and elsewhere. He’s also a vice president with GoodWorks Insurance, an independent insurance brokerage . Follow him on Twitter @NatWorden.

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